The Real Reason the Government Wants You to Drive an Electric Car

By Jeff BrownMarch 6, 2019Print

Nick’s Note: The world’s cars are going electric. By some estimates, 125 million electric vehicles will be on the road by 2030. And the government is going all in to convince Americans to make the switch. The usual reason given: to protect the environment.

But that’s not the whole truth. Today, tech expert and PBRG friend Jeff Brown reveals the real reason the government and corporations want you to go electric…

By Jeff Brown, editor, Exponential Tech Investor

By now, most consumers are aware of the growing trend of electric vehicles (EVs).

According to the Paris-based International Energy Agency (IEA), 125 million electric vehicles will be on the road by 2030. That’s up from an estimated 3.1 million in 2017.

And according to a 2018 survey from the American Automobile Association (AAA), roughly 20% of Americans are considering going electric for their next car purchase.

The adoption of this technology has been aggressively pushed for by governments. In the U.S. alone, government subsidies for electric vehicles have been estimated to be as high as $20 billion.

But the push to migrate from internal combustion engine (ICE) vehicles to EVs isn’t what most people think.

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The most popular motivation used by both consumers and governments is a simple one: EVs are better for the environment. They produce less—or no—pollution.

Sadly, this is a logical fallacy.

Taken out of context, yes, EVs produce less pollution than ICE vehicles. Or do they?

The answer lies in a simple question that’s rarely ever asked… Where does the electricity come from?

Take a state like California…

According to the California Energy Commission, 61.6% of energy used in the state comes from coal (a fossil fuel), large hydro projects (which damage natural habitats of freshwater rivers and lakes), natural gas (a fossil fuel and California’s largest individual power source), and nuclear energy (which produces radioactive waste). Only 29% comes from renewable sources, two-thirds of that being solar and wind.

That means nearly 62% of the electricity used to power EVs in California comes from fossil fuels and energy sources that are highly destructive to the natural environment.

Surprising, isn’t it?

And California is one of the best states in the country for generating renewable energy due to its sunny—and in some places, windy—climate.

Look at a state on the other coast, like New York. The New York Times reports that 94% of its energy comes from natural gas (37%), nuclear energy (33%), and large hydro projects (23%).

That’s right, 70% of the electricity fueling EVs in the state of New York is “burning” carbon or is a form of nuclear power.

My point is that EVs are only as clean as the energy used to fuel them.

So if saving the environment isn’t the real motivation for the adoption of EVs, then what is?

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Consider this: The average ICE car has 2,000 moving parts. The EV equivalent has only 20. That’s just 1% of the average ICE. Incredible, right?

As a result, EVs break down less often and are much cheaper to maintain. This makes them attractive to both automobile manufacturers and to consumers.

EVs also represent an attractive opportunity for automotive manufacturers because the market for ICE vehicles is so flooded.

More specifically, carmakers hoping to sell new automobiles have to compete with used cars. After all, a well-maintained used car can still accomplish the principal task of getting you where you need to go. But it comes at a significant discount.

In the case of EVs—which is a fairly new market for cars—there just aren’t that many used options on the market. So the market for EVs is pretty much a greenfield opportunity.

It’s the opportunity for profit, not concern for the environment, that motivates automakers to pursue EVs.

But what about government motivations for EVs? What has the incentive been to stimulate this industry?

Governments typically tell the public that EV subsidies are for environmental reasons. It’s a simple explanation, but that’s not the whole truth…

Many governments have offered economic incentives like discounted prices or tax rebates to encourage consumers to buy these new EVs.

There’s certainly a hope that these kinds of incentives will become catalysts for domestic corporations to invest in the technology… create new jobs… and hopefully manufacture these new EVs locally—and thus, stimulate the economy.

I always get a kick out of articles that claim Waymo’s motivation is to become a manufacturer of self-driving cars…

Google’s motivation is simple: It wants to collect as much data as possible about consumers and sell that data to whoever will pay for it.

Think about it… According to the U.S. Department of Transportation, the average American driver spends about an hour a day in a car.

In a world where cars and taxis drive themselves, that frees up an hour of time to look at a screen, surf the internet, watch videos… and—you guessed it—look at ads that are served to you.

Google is spending so much time and money on research and development on autonomous driving technology so that it can license that technology to car manufacturers in exchange for being able to retain and sell the data that it collects.

It’s plain and simple.

Force for Good

Now, I don’t want to give you the impression that I’m negative on new technological developments—far from it.

As many of you know, I’ve devoted my entire adult life to studying, working in, and investing in bleeding-edge technology.

And as I’ve told my readers time and time again, our lives are about to improve exponentially in the coming years thanks to new technology.

Self-driving EVs are a tool. And like any tool, they can be used for good… or bad.

Understanding the less obvious motivations in the world of technology is a critical part of my research process. It helps me inform my readers with better investment recommendations.

By looking beyond the “official reasons,” I’m able to better understand the direction of important technology trends.

And now, so can you…

Regards,

Jeff Brown
Editor, Exponential Tech Investor

P.S. Digging deep to uncover the true drivers of new technology is tough work. But I’m happy to say that it’s paid off handsomely. By looking behind the scenes, I was able to pinpoint the best-performing S&P 500 stock in 2018.

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It’s not an exaggeration to say that it’ll be the biggest technology trend of the next decade. But the time to establish a position is now—right now. And I can show you how right here.

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